According to SEBI, expenses charged under these clauses would have to be utilised for distribution expenses incurred for bringing inflows from such cities
Capital market regulator SEBI (Securities and Exchange Board of India) said that mutual fund houses can levy brokerage and transaction costs with a limit of 0.12% for cash market transactions and 0.05% for derivatives dealings.
“The brokerage and transaction cost incurred for the purpose of execution of trade may be capitalized to the extent of 12bps and 5bps for cash market transactions and derivatives transactions respectively,” SEBI said in a circular on Monday.
The circular further said, “Any payment towards brokerage and transaction cost, over and above the said 12 bps and 5bps for cash market transactions and derivatives transactions respectively may be charged to the scheme within the maximum limit of Total Expense Ratio (TER) as prescribed under regulation 52 of the SEBI (Mutual Funds) Regulations, 1996.”
“Any expenditure in excess of the said prescribed limit (including brokerage and transaction cost, if any) shall be borne by the AMC (asset management company) or by the trustee or sponsors,” the circular added.
Besides, AMCs can charge additional expenses of up to 0.3% of daily net assets, if the new inflows from places other than to top 15 cities are 30% of the gross new inflows in the scheme, or are 15% of the average assets under management (year to date) of the scheme, whichever is higher.
According to SEBI, expenses charged under these clauses would have to be utilised for distribution expenses incurred for bringing inflows from such cities.
AMCs would have to calculate the net asset value (NAV) of the scheme on daily basis and publish the same in at least two daily newspapers with nation-wide circulation. Also, any exit load charged by AMCs would have to be credited to back to the scheme.